The East Midlands has the potential to contribute £53bn to the UK economy by 2025, according to new research released by Grant Thornton.
Leading business and financial adviser Grant Thornton UK LLP, which has its East Midlands’ regional office in Leicester, has worked with the CEBR and YouGov to identify a range of growth opportunities that UK businesses could make the most of.
The study marks the launch of Grant Thornton’s Vibrant Economy agenda, a nationwide inquiry to unlock the shared potential of the nation by working with cities, communities and the corporate, public and third sector to jointly develop new solutions.
It reveals the UK’s opportunity for businesses, cities and communities to realise their potential.
Amongst its findings, the study reveals that by unlocking the potential of the East Midlands workforce through greater productivity, the region could generate an additional £53bn.
However, the research highlights that productivity of workers in the region is below the UK average per job – this stands at just shy of £41,000 per worker versus the national average of £47,000.
Another vital component of future growth is international trade, and the study reveals that increasing exports by 18 percentage points to 46% of GDP, the level achieved by Germany, would lead to an additional £84bn of economic output being unlocked.
Despite this opportunity for growth, Grant Thornton’s research reveals that less than half of UK businesses currently identify international markets as a potential profit booster. In the East Midlands, businesses contributed just 7% of UK exports in the third quarter of 2015, placing it behind the South East, which was the largest regional contributor to international trade, but ahead of Scotland, Yorkshire and Humberside, and the South West.
Along with exports, skills shortages are still holding businesses back. Filling all job vacancies that are left empty due to skills shortages could provide a £8.9bn boost to the UK economy by 2025. A new YouGov survey of 1000 business leaders shows that businesses can do a lot themselves to help achieve this potential, particularly in terms of developing their workforce. 70% said that their future success depended on attracting new talent, but only 54% of respondents believe development and retention of their current employees is important to business growth.
The study also identifies growing positivity amongst East Midlands businesses, with 27% seeing strong potential to grow their business in the coming 12 months. Whilst the ability to attract talented individuals is still seen as significant by a third (32%), with more than half (51%) saying retaining and developing employees is important.
Nationally, the report shows that UK GVA could be boosted by £479 billion by 2025 if GVA per worker in every region matched the G7 average (excluding the UK itself), with the exception of London which already outstrips it.
It also found that improved infrastructure (such as better transport links, broadband and location) top the list of factors that were most important to business growth (82%); in the East Midlands, 39% of businesses say transport links need improvement to support their growth potential, whilst 23% say that improving links between business and the region’s universities will also deliver benefits for their business.
Chris Frostwick, partner and practice leader in Leicester, comments: “Grant Thornton is launching its Vibrant Economy agenda to encourage the nation to join them in stimulating discussion, ideas and solutions that will unlock our full potential and help bridge the £479 billion potential gap.
“According to the research, the East Midlands is home to 941 business per 10,000 adults, placing it well behind London, which tops the league with 1,434, but ahead of the North West (919), the North East (629) and the West Midlands (869).
“Results also show the opportunity for businesses to boost their success by focusing on more than just profit,” adds Chris. “Research by the Edelman Trust shows that a business’ contribution to the greater good is the leading factor in whether people trust that business. In our survey only 27% of businesses place importance on having a positive impact on their local community or wider society and 39% of businesses view transparency and good governance as a necessary part of success.
“However the survey did reveal that a core group of around 15% of businesses in the UK said that the success of their business depends on their impact on society, on the environment, the development of their employees and making profits. Interestingly these businesses have higher than average growth forecasts: 88% of these businesses said they had the potential to grow over the next 12 months; compared to 66% of all businesses.
“In addition, the research reveals significant potential across the UK. We believe that addressing at root some of the UK’s fundamental social and economic challenges collaboratively can create vibrant cities and communities across the UK, where businesses and people can flourish.”
Grant Thornton is beginning an 18 month long, nationwide Inquiry into what it will take to build a vibrant economy. The firms wants to use the combined knowledge of the company, its clients and networks to bring people and organisations together to develop the ideas and partnerships on which a vibrant economy will be built.
The aim of Grant Thornton’s nationwide Inquiry is to collaboratively explore how the UK can accelerate economic progress, social good and opportunity for businesses, cities, people and communities. The firm is undertaking this Inquiry as an organisation that has a cross-nation, cross-sector vantage point on the UK economy, working nationwide with organisations across the public, private and third sectors.
Grant Thornton has its East Midlands office in Leicester, where it has approximately 160 staff providing business and financial advice across Corporate and Personal Tax, audit and assurance, employer solutions, corporate finance, and sustainability, to organisations across the East Midlands.
